FinTech Product Providers Hard At Work Programming Tax Cut Response

Changes to the tax code will impact retirement planning beyond individual and pass-through business taxation; investing support tools and tax management platforms trusted by advisers have to make their own adjustments.

Ken Lotocki, product director at Advicent, recently sat down with PLANADVISER to discuss the passage of the Tax Cuts and Jobs Act late last year.

Rather than recall the close votes or the supercharged politics of the whole situation, Lotocki instead offered an inside take on how his firm is adjusting its product set to factor in the tax cuts and technical changes made to the revenue code. Of particular interest to retirement specialist advisers, he has been spending time digging into the NaviPlan product, given that one of the support tool’s functionalities is to help advisers manage clients’ anticipated taxes.

“Since well before the passage of the Tax Cuts and Jobs Act we have been working closely with customers and watching the evolution of the conversation in Washington,” Lotocki said. “It’s been a really interesting and engaging six months for me, given that I actually started out in tax accounting, in school.”

Lotocki said that his team “is still right in the heart of our effort to make the necessary updates to our products.” His team has finished the design of what changes it will make, and implementation has started with the new year.

“I’m sure other advisory support providers will be in a similar position,” he noted. “We’ve put together internal work orders and we have determined that some of the functional changes will most likely be rolled out with a phased approach. For example, advisers will likely see adjustments to NaviPlan’s assumed tax rates and brackets sooner than they will see how the platform will deal with the Tax Cuts and Jobs Act’s various sunset clauses.”

Given his role at Advicent, it’s no surprise that Lotocki urged advisers to lean on their go-to provider partners during this challenging adjustment period—and even potentially some new third party solutions.

“We expect the loss of some of the personal exemptions and deductions is going to have an impact on many advisory clients,” Lotocki suggested. “This will be a good and bad thing for advisers. They will be needed but it will be hard for them to know what advice to give. It puts the emphasis on using good tools.”

“In fact, we hope to be adding more health care cost planning and health savings account [HSA] support capabilities on our platform in the future,” he said. “We really want this functionality and so do our clients. The HSA is clearly a big topic.”